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In re Wade

United States Court of Appeals, Seventh Circuit

June 14, 2019

In Re: Harold Wade and Lorraine Wade, Debtors-Appellants.

          Argued February 6, 2019

          Appeal from the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. No. 15-BK-01035 - LaShonda A. Hunt, Bankruptcy Judge.

          Before Kanne, Sykes, and Hamilton, Circuit Judges.

          SYKES, CIRCUIT JUDGE.

         Debtors Harold and Lorraine Wade moved for sanctions against Kreisler Law, P.C., alleging that the law firm violated the automatic stay arising from their bankruptcy petition by filing a lien against Lorraine's home. The couple had voluntarily dismissed a prior bankruptcy petition just a few months earlier, so the bankruptcy judge denied their motion based on 11 U.S.C. § 362(c)(3), which lifts the automatic stay after 30 days in the case of a successive petition. But the bankruptcy courts are divided over the proper interpretation of § 362(c)(3), so the judge certified her order for direct appeal to this court under 28 U.S.C. § 158(d)(2)(A). A timely notice of appeal followed.

         But the Wades never filed a petition for permission to appeal as required by Rule 8006(g) of the Federal Rules of Bankruptcy Procedure. Kreisler moved to dismiss the appeal based on this omission. We provisionally accepted the appeal and directed the parties to address the effect of the procedural violation in their merits briefs.

         We now dismiss the appeal. Rule 8006(g) is a mandatory claim-processing rule, and if properly invoked, it must be enforced. See Hamer v. Neighborhood Hous. Servs. of Chi., 138 S.Ct. 13, 17 (2017). Because Kreisler properly objected, the appeal must be dismissed.

         I. Background

         The Wades filed a Chapter 13 bankruptcy petition in January 2015, which automatically stayed any collection actions against their property. See 11 U.S.C. § 362(a). But the petition was successive-they had voluntarily dismissed a different petition two months earlier-and § 362(c)(3) states that if a prior petition "was pending within the preceding 1-year period but was dismissed," the automatic stay "shall terminate with respect to the debtor on the 30th day after the filing of the later case."

         Just how much of the stay was lifted became relevant after the Wades discovered that Kreisler recorded a lien against Lorraine's home in April 2015. Because their bankruptcy case was active at that time, the Wades moved in the bankruptcy court to sanction Kreisler for violating the stay.

         The parties disagreed about the meaning of § 362(c)(3). Kreisler contended that it lifts the entire stay. The Wades argued that the phrase "with respect to the debtor" limits the statute's effect so that it lifts the stay only for non-estate property. In their view the stay still prevented Kreisler from recording the lien because Lorraine's house was estate property.

         The bankruptcy judge denied the Wades' motion, concluding that the entire stay lifted in February 2015, which validated Kreisler's April 2015 lien. The Wades appealed to the district court. But they also asked the bankruptcy judge to certify her order for direct appeal to this court under § 158(d)(2)(A). The judge granted that request and issued a certification order. The Wades then filed a notice of appeal, but they never filed a petition for permission to appeal as required by Rule 8006(g) of the Federal Rules of Bankruptcy Procedure. Kreisler moved to dismiss based on this procedural oversight. We provisionally accepted the appeal but instructed the parties to brief the dismissal motion with the merits.

         II. Discussion

         We begin (and end) with the question whether the failure to file a petition for permission to appeal requires dismissal of this appeal. We are permitted to consider a direct appeal from an order of the bankruptcy court if the bankruptcy judge certifies the order for appeal and we "authorize[] the direct appeal." 28 U.S.C. § 158(d)(2)(A). The Federal Rules of Bankruptcy and ...


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